India should nudge US to appoint judges to hear appeals at WTO

At the concluding session of the G-20 summit at Bali, Prime Minister Narendra Modi said India will strive to ensure that the grouping acts as a prime mover to envision new ideas and hasten collective action. He added that India’s presidency will be inclusive, ambitious, decisive and action oriented.

A quick way to deliver something on that promise is to nudge President Biden to clear the way for appointment of judges to hear appeals at the dispute settlement body (DSB) of the World Trade Organization (WTO).

Dispute settlement is the central pillar of the multilateral trading system, and the WTO’s unique contribution to the stability of the global economy. This is because without a mechanism for settling disputes, the rules cannot be enforced. 

The Trump administration was aggrieved by some of the decisions of the DSB. So, it blocked the appointment of judges to hear the appeals at the WTO. The Biden administration has not moved forward in the matter. So, many of the panel rulings of the DSB are pending at the appeal stage and the disputes linger.

The DSB panel ruling on export subsidies went against India and is pending at the appeal stage. So, apparently the dysfunction of the appellate body suits India. But India has already abolished the merchandise exports from India scheme. The export-oriented units and the special economic zone (SEZ) scheme can be tweaked, delinking tax concessions from export earnings. The scheme of manufacturer in bonded warehouses already allows duty free import of capital goods and inputs without any export obligation. So, even if India’s appeal fails it wouldn’t matter much.

The G20 Bali declaration reaffirms that the rules-based, non-discriminatory, free, fair, open, inclusive, equitable, sustainable and transparent multilateral trading system, with the WTO at its core, is indispensable to the advancing shared objectives of inclusive growth, innovation, job creation and sustainable development in an open and interconnected world as well as to support the resilience and recovery of a global economy under strain due to Covid-19 and supply chain disruption. 

It says that reforming the WTO is crucial for strengthening trust in the multilateral trading system. It commends the successful conclusion of the 12th WTO Ministerial Conference (MC12), and commits the G20 leaders to seize and advance the positive momentum by engaging in active, constructive, pragmatic, and focused discussions on WTO reforms to improve all its functions, including reform of the dispute settlement mechanism, on the path leading to the next WTO Ministerial Conference (MC13). It highlights the importance of allowing agriculture and food trade to flow smoothly and reaffirms the need to update global agricultural food trade rules and facilitate trade in agricultural and food products. It emphasizes the importance of not imposing export prohibitions or restrictions on food and fertilisers in a manner inconsistent with relevant WTO provisions. It says that trade and climate/environmental policies should be mutually supportive, WTO consistent and contribute to the objectives of sustainable development.

So, India persuading the Biden administration to allow the appointment of judges to hear appeals at the WTO will only demonstrate the resolve of the G-20 leadership to move forward towards its stated aims. It is a low-hanging fruit that can be plucked easily, bringing disproportionate goodwill and enhancing India’s standing in the global community.